Lt. Gov. David Dewhurst yesterday told some Dallas-area business types he would entertain spending more than $1 billion for water and transportation projects from the state’s rainy day fund.

If you weren’t thinking, even in this day of trillion-dollar government deficits, that $1 billion is still a lot of money, you might have thought, ‘What in the heck is this rainy day fund?’

And a fine question it is.

About this holiday time for the last 20 years or so, before every biennial session of the Legislature, it seems that one big-name elected official or another waxes philosophical about how or whether to draw money from the Economic Stabilization Fund, its formal name.

The Legislature in 1987, having the bejesus scared out of it by a bad economy, asked Texas voters to approve a constitutional amendment allowing the state to set aside a portion of oil and natural gases taxes collected each year for budget emergencies. A rainy day, if you will.

Voters in November of 1988 saw the wisdom and passed the Economic Stabilization Fund into law.

Everything except the development of the fund as a political tool. As recently as a decade ago, there was less than $200 million in the fund. Today, the estimated value of the fund is more than $8 billion, according to the Comptroller’s figures.

Of the $3.5 billion the Legislature has spent from the fund overall, about $1 billion was spent in 2003-04, another $1 billion in 2005 and $1.2 billion in 2006-07, particularly tough budget times.

In March, sounding all fiscally conservative, Perry warned the Legislature that the rainy day fund should be tapped only as an “absolute last resort.” A week later, Perry said he thought it would be all right to use $3.2 billion to help balance the budget.

David Dewhurst

Weeks away from the start of another session, Dewhurst told the Dallas Regional Chamber it might be nice to create a development bank from which local governments could draw to build reservoirs and other water infrastructure, the Dallas Morning News reports.

Rainy day money might also serve as the feathering for a highway construction project bank, Dewhurst told the group.

But, in fine political fettle, Dewhurst was careful to point out that his infrastructure expansiveness would be done within a framework of ideological austerity.

“In any circumstance – and this is bottom line — we have to maintain a healthy balance in the rainy day fund,” he said. “But as a fiscal conservative, we can draw down a little bit and still keep a very healthy balance.”

As Dewhurst is well aware, such long-range forecasts are useless heading into a legislative session. It remains to be seen come March whether he can convince lawmakers to get out their umbrellas and put on their yellow slickers and boots.

In what might someday be seen as a turning point for the Republican Party in Texas, former state solicitor general Ted Cruz tonight upset Lt. Gov. David Dewhurst in the Republican runoff for the United States Senate.

Cruz, who had not run for political office before, will be heavily favored in the Nov. 6 general election to beat Democrat Paul Sadler, who easily won his runoff Tuesday night.

Cruz defeated Dewhurst 57 percent to 43 percent with all of the statewide vote counted. Associated Press called the election for Cruz an hour-and-a-half after the polls closed with little more than 20 percent of the vote counted and Cruz ahead by 7 percent.

“In the coming months, I will do everything I can to support the election of Ted Cruz to represent Texas in the U.S. Senate and be available to him for any questions that will prepare him for the issues he will face,” she said in a prepared statement. “It is more important than ever that we have leaders who are committed to get our country back on track – focused on cutting spending and creating jobs to grow our economy.”

In two other key races for federal office, Roger Williams, the former Texas secretary of state, ran away from Central Texas Tea Party founder Wes Riddle for the Republican nomination for U.S. Congress in the 25th District. Williams trounced Riddle 58 percent to 42 percent with all precincts reporting.

And in what most thought would be a tight race to the finish, state Rep. Pete Gallego prevailed over former Congressman Ciro Rodriguez for the Democratic nomination for Congress in the 23rd District. Gallego bested Rodriguez 55 percent to 45 percent with all precincts reporting.

While the full explanation for and the impact of Cruz’ victory will be parsed for months to come, Tea Party leaders and conservative fundraisers from outside Texas stepped forward Tuesday night to congratulate Cruz and to take some credit for the win.

Ted Cruz

Cruz had laid the groundwork canvassing the state at least a year before small government conservatives began referring to themselves as Tea Party members and three years before he announced he would run for Senate.

Tea Party leaders in Texas identified him as one the key candidates in a statewide effort to oust incumbent Republicans in the May primaries. Dewhurst, a liked and respected conservative lieutenant governor for nine years, might have known there was trouble ahead when he failed to make it out of the primary without a runoff.

“This is a victory both for Ted and for the grassroots Tea Party movement,” Sarah Palin, the former vice-presidential candidate, who campaigned for Cruz in Texas, said in a Facebook post Tuesday night. “Go-along to get-along career politicians who hew the path of least resistance are no longer acceptable at a time when our country is drowning in debt and our children's futures are at stake.”

Amy Kremer, chairman of the Tea Party Express, the largest political action committee affiliate, said, “We saw an unquestionably strong and bold tea party conservative in Cruz. We saw Dewhurst as the anointed Austin politician that was exactly what we have been working to rid Washington of. And finally we saw the passion in the Texas tea party activists that could set the stage for this historic victory.”

Analysts will also be looking back on an engulfing wave of conservative money from outside the state donated mostly by the national Club for Growth and the Texas Conservatives Fund.

Dewhurst loaned his campaign $24.5 million, a factor driving what the nonprofit website called “the most expensive non-presidential race this cycle.”

Club for Growth Action, the conservative group's super PAC arm, plugged over $5.5 million into the contest.

“Tonight, Texas Republicans have shown Washington that the people do not work for the politicians – the politicians work for the people.” Chris Chocola, president of Club for Growth, said in a statement. “Ted Cruz won because he clearly articulated the pro-growth message that Republican voters across the country have responded to.”

Early voting last week was a tipoff the Cruz and Dewhurst race excited Republicans, an enthusiasm that favored Cruz. In five days 243,795 Republicans cast early runoff ballots, 3.3 percent of the state’s registered Republican voters, according to figures compiled by the Secretary of State.

In a much higher-profile, broader primary, with 12 days to vote early, 343,497 or 4.17 percent of Texas’ registered Republicans cast ballots.

On Tuesday night, Rep. Gallego, D-Alpine, showed he was capable of reigniting his base. Having led from the start of the campaign, Gallego was beaten in the May 29 Democratic primary 46 to 41 percent by Rodriguez in the 48,000-square-mile 23rd District.

Gallego raised considerably more money than Rodriguez. Observers who followed the race closely said Rodriguez had been working door to door for much longer than Gallego in an attempt to avenge a loss to incumbent Republican, Francisco “Quico” Canseco.

The winner of the runoff will meet Canseco in the Nov. 6 general election.

Riddle’s same strategy of working the redrawn 25th District was to overcome Williams, a conservative who had raised and spent almost eight times as much money and had the advantage of having held a statewide appointed office.

Riddle, a retired lieutenant colonel, a 20-year veteran of the U.S. Army and novice candidate from Belton, surprised some by edging former Railroad Commission Chairman Mike Williams in the primary and forcing a runoff.

Editor's Note: This story was updated as election results were updated.

Three of the most compelling elections in the last decade in Texas are likely to be decided on July 31 by a relative handful of voters.

Having commanded arguably the most powerful political office in the state for nine years and pouring nearly $25 million into a campaign, Lt. Gov. David Dewhurst finds himself knotted up to the end with Ted Cruz, a former state solicitor general who has never held elective office, in the GOP runoff for U.S. Senate.

In the Republican primary in the redrawn 25th District, former secretary of state Roger Williams has raised nearly eight times as much money to stay ahead of Wes Riddle, Central Texas Tea Party founder whose tireless campaigning belies a maiden political candidacy.

And in the Democratic primary in the 23rd, Pete Gallego, the longtime West Texas state representative with more money and endorsements, now finds himself running from behind to catch former congressman Ciro Rodriguez.

Each of the runoffs was forced in a May 29 primary that drew less than 16 percent of registered voters, next to 2004 the worst turnout in a presidential election year in the last 20, according to turnout figures provided by the Secretary of State.

In 2000, runoff elections drew just 2.11 percent of registered Democrats and 1.93 percent of registered Republicans. In 1996, 4.97 percent of registered Democrats and 2.41 percent of registered Republicans cast votes in the runoff elections, according to the secretary of state’s figures.

“It’s the middle of summer, it’s the heat, it’s people taking vacations,” says Lydia Camarillo, who has done considerable canvassing in the 23rd District for the Southwest Voter Registration Project of San Antonio. “People think they’ve already voted in the primary. They have to be told they have to vote again. Those people have to be motivated to come out and vote.”

The advantage, all things being equal, goes to the candidates who have done the most to excite and inspire their respective voting bases, James Henson, director of the Texas Politics Project at the University of Texas.

Ted Cruz

From presumptive heir to the seat being vacated by Sen. Kay Bailey Hutchison in early spring, Dewhurst has steadily lost ground to Cruz, Henson says. As recently as May, before the primary, a survey by the Project showed Dewhurst leading Cruz 40 percent to 28 percent, with former Dallas Mayor Tom Leppert getting 15 percent.

Dewhurst’s own poll, released earlier this month, showed him ahead by 8 percentage points. Public Policy Polling, however, released a poll on July 12 that showed Cruz ahead of Dewhurst by 49 to 44 percent.

So much has the tenor of the race changed that some have questioned the value of Leppert endorsing Dewhurst two weeks before the election.

“You could see by the numbers Cruz making steady inroads,” Henson says. “I now think it’s going to be close. I’m not willing to bet the mortgage either way.”

Cruz has at the same time shown that all things don’t necessarily have to be equal.

Cruz raised $1.7 million from mid-May through the end of June alone, a sign of confidence in his continued strong showing.

The biggest reason for this ostensible surprise in the race was the consistent underestimation of the dissatisfaction of conservative Republicans with a candidate, Dewhurst, who appeared to have everything someone needed to become a U.S. senator, Henson says.

The media began following Cruz at the time he announced he was running for the Senate. Alice Linahan, a leading Tea Party organizer and member of the Nationwide Tea Party Coalition, has been following Cruz for three years.

“He’s been out there with the people, talking to the people, having his picture taken with the people,” Linahan, who lives in Argyle, south of Denton, says. “When they talk about all the numbers, those polling experts have no idea what has been going on at the grassroots level.”

Tea Party leaders made it clear to Texas Watchdog last October they would be focused on cleaning house in the Republican Party long before they turned their attention to Democratic opponents.

“Definitely, Ted Cruz is what the Tea Party was looking for,” Linahan says. “David Dewhurst is seen as a kind of country club Republican. Anyone who has been in office that long has had to make backroom deals to get things done. They end up selling their soul.”

Corbin Casteel, a Republican consultant and strategist in Austin, acknowledges the depth of the Tea Party movement has become clearer to the mainstream in the party.

However, Casteel warned observers not to discount Dewhurst’s ability to deploy his personal fortune in the last days before the election. And in spite of a Tea Party distaste for deal-making, voters are being asked to choose a person who will serve without seniority in a body that still values comity and compromise.

“It should be very interesting. There’s no doubt Cruz’ voters are more excited right now, but no matter what, money still matters. This is going to be very close.”

Riddle takes to grassroots, Williams to massive advertising in District 25

Although the dollar amounts are much smaller, Casteel says he thinks money might matter even more to Roger Williams in fighting off Wes Riddle, whose voter base is much the same as motivated as the base for Cruz.

Wes Riddle

Riddle, a retired lieutenant colonel and a 20-year veteran of the U.S. Army from Belton, remains a bit of a riddle outside of his core Tea Party support.

At 14.6 percent of the vote, Riddle finished well behind Williams, who polled 25 percent. But four of the others in a 12-candidate field received at least 9 percent of the vote, including former Railroad Commission Chairman Mike Williams.

It has been hard to draw the attention of voters away from all of the advertising bought by Williams, a successful car dealer in Weatherford. Williams had raised $2.7 million through mid-July and had $512,124 on hand, according to Federal Election Commission filings. Through the same period, Riddle had $47,527 remaining of the roughly $345,000 he had raised, according to the FEC data.

Riddle has compensated by relentlessly covering the 200-mile long, 11-county district. “His grassroots game has been second to none,” Casteel says.

He has connected with conservative voters in the same way Cruz has, says Linahan, who publicly endorsed Riddle. He is likely, she says, to benefit from a strong showing in the runoff by Cruz.

Although he recently won the endorsement of Texas Party hero Rep. Ron Paul, Riddle has not been as successful as Cruz in positioning himself to the right of his opponent. Fissures have developed among Tea Party membership in the district.

Roger Williams

When contacted for comment by Texas Watchdog, Angela Cox, the former chairman of the Johnson County Tea Party, said she had resigned her post to work for Williams.

“I have known Roger for several years and have always strongly supported him,” Cox said in an e-mail. “He is someone I believe that Tea Party members find to have the same beliefs that we have. He will do us a great job when he wins this campaign.”

Linahan says she intends to vote for Riddle, but says she thinks, perhaps, this is a race upon which Tea Party members are not willing to angrily split.

Chris Britton, a Republican consultant who lives in the district and who has friends who have or are working for both candidates, says he and the rest of the district have been bombarded by Williams ads.

As well as Riddle has done on the ground, Britton says, “I just feel like the momentum is with Williams.”

A tossup in vast 23rd District between Gallego, Rodriguez

Pete Gallego

Momentum has shifted sharply in the Democratic primary in the sprawling 23rd District, 48,000 square miles in all or parts of 29 counties from San Antonio to the El Paso County border.

From the time he announced his candidacy until the May 29 primary Rep. Pete Gallego was considered the frontrunner. His chief opponent, Ciro Rodriguez, had the taint of having lost to Canseco in the general election in 2010.

That political reproach was the spur Rodriguez needed. Much like Cruz, Rodriguez began campaigning long before anyone had announced for anything, while no one was looking.

When primary night was over, Rodriguez had won 46 percent of the vote, Gallego 41 percent. Suddenly, Rodriguez looked like he might be the best candidate to win back the congressional seat for Democrats, Camarillo says.

The race has been relatively quiet, with no major clashes between the two candidates. Gallego has $7,051 on hand as of mid-July after raising more than $844,000, according to the FEC. Rodriguez had more than $19,722, having raised more than $304,000, the FEC says.

Ciro Rodriguez

But rather than money, which proved to be a bit of a canard in the primary, Camarillo says she thinks the runoff will be decided by the motivation of the core voting bases for the candidates.

Gallego, from Alpine, represents a lot of territory, sparsely populated. Rodriguez, from San Antonio, remains very popular in a place where a third of the voters in the district live.

Beyond that, the primary demonstrated that even two well liked, politically established candidates could not necessarily bring out people who usually don’t vote in general elections, let alone a runoff.

“Leading up to the primary, Rodriguez outworked Gallego,” Camarillo says. “But Gallego has won his share of elections, too. He hasn’t been sitting back. I can’t call this one. I think it’s clearly a tossup.”

Lt. Gov. David Dewhurst had for years kept on hisstate Web site a transcript of a 2007 speech he made supporting a guest worker program for illegal immigrants. Now it’s gone, and the Young Conservatives of Texas has filed an open records request to check it out.

The Austin-based group supports Ted Cruz, who is facing off in a July 31 Republican runoff election against Dewhurst in a bid for the U.S. Senate seat of Kay Bailey Hutchison, who is retiring.

The winner is most likely to head to Washington in the heavily Republican state.

Dewhurst’s 2007 speech was delivered when he was being honored as “Mr. South Texas” in Laredo.

“We need a human presence at the border and a humane presence at the border,” Dewhurst said. “I support secure borders both North and South and I support a guest worker program for those here today illegally. Labor and skilled workers are critical to our Texas economy. Our federal government needs to get its act together.”

Hard-line conservatives, including the young conservative group, are against anything with a whiff of amnesty for workers illegally in the U.S.

The open records request has as much to do with the removal of the statement from public view, though, as the actual statement.

In a press release, Jeff Morris, chairman of the Young Conservatives of Texas, said, “We have known throughout this campaign that the Lt. Governor is running away from his record. But it is appalling that Mr. Dewhurst would try to delete the past in his effort to pull the wool over Texas voters’ eyes. If he expects to be our next Senator, Mr. Dewhurst should stand-by his moderate record and apologize for it, not try to hide from it, or deceive voters about it. We have filed our open records request so that Texas voters can know the full truth about David Dewhurst’s record.”

The U.S. Senate candidate forum in Houston Wednesday was summed up neatly in a headline by the San Antonio Express-News: “At Senate debate, Cruz rips Dewhurst, who rips Obama.” It’s a truth-telling header that speaks more to the lack of panache of either of the front-runners vying to take the seat of retiring U.S. Sen. Kay Bailey Hutchison.

Former Texas Solicitor General Ted Cruz, the Tea Party favorite, has hammered on the notion that he is the real conservative in Republican primary, while his foe, Lt. Gov. David Dewhurst, has allowed Democrats to chair state Senate committees during his tenure under Gov. Rick Perry, which began in 2003.

The forum allowed each candidate to speak his piece about how he planned his own version of change, which Dewhurst used to promote himself and berate the Obama administration rather than to take on Cruz, whom he leads 38 to 26 percent, according to one poll.

"We need quite frankly, to send Barack Obama back to Chicago, get a good conservative Republican in the White House, that will follow a stable predictable course, so businesses know that the rug won't be pulled out from under their feet," KUHF in Houston reported Dewhurst as saying. "Invest it in creating millions and millions of new jobs, that will turn this country around."

The Texas Tribune reported that Dewhurst promised to apply “the Texas model” to his position in Washington if elected, a light touch on businesses that would enable growth. “We're seeing an avalanche of job-killing regulation" from Washington, D.C., Dewhurst said.

Among the best assessments of the Texas race for the Senate shows up of all places in the Seattle Post-Intelligencer in an Associated Press column.

The tone of the race is just one sign of the continuing rightward drift of politics in one of the most conservative states. With nearly 50 percent of Texas voters calling themselves "very conservative" in a recent poll, the competition in the GOP is now all about who's the purest and most doctrinaire. And longtime officeholders who rose in an earlier time can find themselves held up against the new breed of hard-liners who brook no compromise with the opposition.

KERA in Dallas has an excellent gathering spot for voters to check out the platforms of the candidates, a Republican primary field that also includes former Dallas Mayor Tom Leppert and former ESPN analyst Craig James. Former state Rep. Paul Sadler and Sean Hubbard, a former sales and billing worker in Garland, are vying for the Democratic nomination, although the primary is expected to serve as the election for an office in which Democrats have little chance.

It is Texas Watchdog’s privilege to extend a laurel and hearty handshake to the El Paso Times for dogging state politicians given more than $100,000 in campaign contributions from convicted felon Bob Jones.

The newspaper two months ago extracted promises from U.S. Sen. John Cornyn, U.S. Rep. Silvestre Reyes, Gov. Rick Perry and Lt. Gov. David Dewhurst to give their Jones donations, catalogued here by Texas Watchdog, to charity.

A federal judge last February sentenced Jones to 10 years in federal prison and ordered him to pay $68 million in restitution for embezzling millions of dollars from government programs while he headed the National Center for Employment of the Disabled.

Perry, the primary beneficiary of Jones’ generosity, raking in $80,000 between 2002 and 2005, has not yet given away the tainted campaign money, the Times is reporting today. A Perry spokesman, however, says the checks are in the mail. Almost.

Dewhurst has shed $10,000 of the $22,500 he received, and a spokesman said the rest would be handed out by the end of the month.

Cornyn has so far donated $5,100 of about $12,000. Reyes gave $3,500 of a total of $18,500 to the U.S. Department of Treasury. His staff says he is in the process of purging his campaign accounts of all Jones and Jones family donations.

All of Jones’ contributions were made before his indictment in 2008 on 37 counts of public corruption. Texas law does not require elected officials to return donations from people later convicted of crimes.

As is custom here, taxpayers opened their arms offering a Department of Public Safety motorcycle escort for the protesters as they blocked noontime traffic on a caravan to the Capitol.

Accompanying them were six burros, balky as burros famously are, but in captivity looking not at all like the feral burros the Texas Parks & Wildlife Department shoots and kills from time to time in Big Bend Ranch State Park.

Taxpayers pay to have the bright and crafty burros shot because they bespoil the fragile ecosystem of Texas’ southern tip, a Parks & Wildlife policy statement says.

An ecosystem being in the eye of the beholder, the Protection League founder Marjorie Farabee says the slaughter is a plot to create lebensraum for bighorn sheep, which have their own lobbying group, and other game that make hunting in the park a sport for the rich.

Having been turned away by Gov. Rick Perry’s office, the League delivered 103,000 or so petitions to the office of Lt. Gov. David Dewhurst. Dewhurst is a member of the Texas Rodeo Cowboy Hall of Fame for his prowess aboard the feral burro’s domesticated cousin.

League members briefly considered, then decided against requesting a personal audience for their burros, voicing what everyone in this city takes for granted.

The Senate, holding its collective nose, sent a Texas Windstorm Insurance Association bill to a conference committee to settle yawning differences in the way the two chambers have viewed reform of the troubled association.

“There is still work to be done on this issue, and we must pass legislation to adequately compensate TWIA policyholders without enriching trial lawyers or further undermining TWIA’s financial stability. Reforming TWIA is imperative to protecting Texans from the effects of devastating hurricane seasons, and I look forward to this important legislation reaching my desk in the next week, otherwise I will be forced to call another special session to protect Texas taxpayers and homeowners.”

"I'm pleased that the Senate has taken swift action to pass the TWIA reform bill,” Dewhurst said in a press release. “Today's vote brings us one step closer to achieving the important reforms we need − protecting Texas' coastal property owners without weakening our landmark lawsuit reforms or increasing unwarranted lawsuits which penalize all Texans.”

Sen. Eddie Lucio Jr., D- Brownsville, who voted against the bill in the Senate Business and Commerce Committee this morning, said he reluctantly voted in favor in the hope that a unanimous vote would put pressure on the House.

Smithee has been clear that short of a considerable rate increase, such damages collection curbs are the only way the state of Texas can control an exposure bared in the aftermath of Hurricane Ike in 2008.

Senators Wednesday afternoon made clear their desire to eliminate the state’s exposure altogether. Sen. Troy Fraser, whose Senate Bill 44 to abolish TWIA failed to make it to committee, rued having to continue a discussion of the association’s shortcomings that began four sessions ago.

“This is an agency that is absolutely broken and dysfunctional. It is time for us to recognize that it is time for the state to get out of the insurance business, Fraser, R- Horseshoe Bay, told his colleagues. “The snake is there. We have the axes in our hands. Maybe it’s time to kill the snake.”

Sen. John Carona, R-Dallas, who has made clear his distaste for the political wrestling over the bill, said he only regretted not being able to join the other 18 senators who signed onto Fraser’s abolition bill.

“Because TWIA has become a political body I’m afraid we may never get it fixed,” Carona said.

The Senate has had to contend with the objections of senators like Steve Ogden, chairman of the Senate Finance Committee, who said Wednesday that TWIA is not now and has never been actuarially sound.

“The fact is, TWIA is not actuarially sound, it’s broke,” Ogden said. “I know there are billions of dollars of unfunded liabilities coming due for this state in the next couple of years. This doesn’t need to be one of them.”

The Senate, however, has also tried to satisfy those members representing more than 250,000 policyholders in 14 coastal counties, whose only alternative for windstorm insurance is the state.

This fight for the policyholders has been taken up by the Texas Trial Lawyers Association, several of whom have made millions of dollars representing them in legal claims against TWIA.

Texans for Lawsuit Reform pushed back, contending that it was unreasonable for clients getting favorable coverage from the state to be able to collect triple the cost in damages when TWIA failed to meet the terms of the policies.

The bill in its various forms supported by big majorities in the House have reflected a desire to cap damage collection.

The Senate’s key compromise came in agreeing to drop an 18 percent penalty on TWIA for paying late on policy claims, a penalty Carona told his colleagues Perry would not support in any TWIA bill.In the end, Carona said he intended to fight hard for the flawed bill because it represented the best legislation that could be crafted to satisfy the Senate.

Sen. John Carona, R-Dallas, told his committee House Bill 3, which would curb the ability of more than 250,000 windstorm insurance policyholders to sue for noncompliance, was the product of too many competing interests.

“Each group,” Carona said, “wants more than what is reasonable.”

Carona said the compromise bill pleased neither the groups seeking to curb lawsuits against the association, a quasi-government agency, nor the trial lawyers concerned the bill abridges a citizen’s right to a day in court if the association breaches its insurance policy agreements.

He suggested a nonpartisan group of senators from the committee appeal to Lt. Gov. David Dewhurst for some direction in producing a bill satisfactory to the House and the Senate.

However, the House last week passed in HB 3 a bill that prevented a policyholder from collecting triple damages for losses that were a consequence of the association’s delay in settling a claim.

The House took a strong stand on lawsuits to blunt the exposure of the state to lawsuits, the cost of which would be shouldered in part by TWIA policyholders in rate increases. House reformers were alarmed at the many millions of dollars paid out by TWIA in damages after the thousands of claims filed after Hurricane Ike in 2008.

The compromise bill allowed for a policyholder to sue for double those consequential losses, but placed the burden of proof on the policyholder to prove the association’s breach of a policy was intentional.

Sen. Eddie Lucio Jr., D-Brownsville, called the bill “a political solution to a real problem. The collateral damage will be those of us on the coast insured by TWIA. This bill is a disservice to all coastal Texans.”

At the same time, there is a question about whether or not Sen. Troy Fraser, R-Horseshoe Bay, will get a hearing for a bill he filed late last week to abolish the agency.

Rep. John Smithee, R-Amarillo, author of HB 3, said he believed the House would not accept such a bill, even if the Senate were to approve it.

The special session resuscitator has been strapped to health care legislation created and enthusiastically supported by conservatives, including what is now a combined state-driven reform bill and a bill that would allow Texas to join with other states in creating their own health care compacts.

Lt. Gov. David Dewhurst met with House Speaker Joe Straus Tuesday to decide how to proceed with something now called Senate Bill 7 and Senate Bill 5 -- the compacts bill formerly known as House Bill 5 -- which were referred to the Senate Finance Committee.

Because the savings envisioned in the bill is part of the budget passed by the Legislature in the regular session, Gov. Rick Perry has paired it with school finance as the first priority of this special session.

However, the 145-page bill also now includes the original Senate Bill 7 and Senate Bill 8, a pair of health care reforms written by Sen. Jane Nelson, R-Flower Mound and championed for the past two regular sessions by Dewhurst.

SB 8 would have created the Texas Institute of Health Care Quality and Efficiency to oversee cost control and the quality and accountability of health care in Texas.

The bill proposes that the state allow for health care collaboratives, arrangements between doctors and health care providers, as one of the cost and quality alternatives, with the Institute monitoring to see if collaboratives fulfill their intended goals.

SB 7 would have created the Medicaid and CHIP Quality-Based Payment Advisory Committee to work with the state Department of Health and Human Services on a new state payment system for health care providers and health care institutions.

The advisory committee would reward those providers and institutions for providing their care based on patient outcomes, rather than the volume of services and procedures. The goal is to create a high-quality, cost-effective health care system, promoting wellness, preventative care and better overall health outcomes.

The new Senate Bill 5 , now being carried by Sen. Joan Huffman, lays the groundwork for a fundamental change in the relationship between the states and the federal government on health care. Based on Section 10 of Article 1 of the Constitution, the bill would have allowed states to enter into contracts that would supersede federal authority to dictate the terms of Medicaid.

"I am honored to carry the health care compact legislation in the special session,” Huffman, R-Houston, said in a statement issued late Tuesday. “I believe that Texans should have a choice as to their preferred model for health care services rather than being forced to participate in a mandated program from the federal government.”

Arlene Wohlgemuth, former state representative and director of the Center for Health Care Policy for the conservative Texas Public Policy Foundation, said she believes all of the conservative health care reform measures will be addressed and passed in this or another special session.

In particular, the health care compacts legislation, SB 5, is critical, she said. “I hope Texans and the American people realize how important it is to the future of health care,” Wohlgemuth said. “I want this to be a campaign issue in the 2012 election."Lt. Governor Dewhurst met with Speaker Straus this morning to discuss how we can move both of these important, cost-saving health care measures forward during the Special Session,” Dewhurst’s spokesman, Mike Walz, said late Tuesday.